Saving a deposit is the longest step in the first-time buyer journey, and the size you settle on has knock-on effects on your mortgage rate, monthly repayment, and the type of property you can realistically afford. This guide walks through the minimum, the practical sweet spot, and how to think about the trade-off between saving longer and buying sooner.
Practical target: 10% is the realistic sweet spot for most first-time buyers. It opens up far more lenders than 5%, costs significantly less in interest, and is achievable on a typical timeline without delaying a purchase by years.
How much do you actually need?
Most UK high-street lenders will accept a 5% deposit on a residential purchase — meaning a £200,000 property requires £10,000 down. A handful of lenders offer 100% mortgages, but eligibility is narrow (typically requiring a guarantor, a track record of rent payments, or both) and the rate premium is significant.
In practice, the lowest mortgage rates kick in at the 60% LTV (loan-to-value) tier, meaning a 40% deposit. Most first-time buyers won't reach that, but the rate steps at 90%, 85%, 80%, 75% and 60% LTV are all meaningful — moving from 95% LTV to 90% LTV can save tens of thousands of pounds in interest over the term.
Government help: the Lifetime ISA
A Lifetime ISA (LISA) lets first-time buyers save up to £4,000 a year and receive a 25% government top-up — up to £1,000 a year. The funds (including the bonus) can be used towards a first home up to £450,000 in value, anywhere in the UK.
Withdrawals for any other purpose before age 60 incur a 25% penalty, which is functionally worse than just losing the bonus — you'd lose some of your own contribution too. Open one early in the year to maximise the bonus runway.
Why a bigger deposit matters beyond the rate
Beyond the LTV rate step, a bigger deposit means a smaller loan and therefore a smaller monthly repayment. Over a 25-year term at typical 2026 rates, every £10,000 of extra deposit saves around £55–£70 a month — and roughly twice that in lifetime interest.
It also gives you a buffer against negative equity if the market dips, and improves your chances if you need to remortgage or move. Lenders re-test affordability every time you remortgage; a bigger deposit means easier moves later.
Where to keep the deposit while you save
Cash savings should generally be split between an instant-access account for the bulk of the money and a Lifetime ISA for the portion you're confident will go towards the home. If your timeline is more than 18 months, a Cash ISA fixed-rate bond can lock in a higher rate.
Avoid putting any money you need within two years into stocks and shares — the volatility is the wrong shape for a defined deadline. A 20% drop two months before completion is a much bigger problem than a slightly lower interest rate over a year.
The hidden costs that eat into your deposit
Buyers routinely under-budget the non-deposit costs. Plan for: solicitor fees (£1,200–£2,000), survey (£400–£1,200 depending on type), mortgage product fee (often £999, sometimes added to the loan), Land Registry fees (£200–£500 by price), removal costs (£300–£1,500), and the first few months of furniture and works.
You can read more on these in our checklist before making an offer and stamp duty for 2026 guide.
Worked example: 5% vs 10% deposit on a £250,000 home
A £12,500 (5%) deposit means a £237,500 loan. A £25,000 (10%) deposit means a £225,000 loan. Assuming a 0.4 percentage-point rate improvement from moving into the 90% LTV tier, the lifetime interest saving over a 25-year term is meaningful — often £20,000–£30,000 in total — and the monthly payment drops by around £80–£120.
Whether that's worth waiting an extra six months depends on how house prices are moving in your area. In a rising market, six months of asking-price growth can wipe out the benefit; in a flat or falling market, the deposit boost is pure gain. Regional trends matter here.
Should you accept help from family?
A gifted deposit from family is treated as your own funds by most lenders, provided the donor signs a gifted-deposit letter confirming the money is a gift and not a loan with repayment expected. This is now standard practice — your solicitor handles the paperwork.
Where it gets complicated is joint borrower–sole proprietor arrangements (a parent on the mortgage but not the deeds), or family member deposits routed through a Family Springboard / offset product. Take independent mortgage advice before structuring those — the tax and inheritance consequences can outweigh the rate saving.
Frequently asked questions
How much deposit does a first-time buyer need in the UK?
Most UK lenders accept 5% deposits, meaning £12,500 on a £250,000 home. However, 10% gives access to more lenders and better rates, and 15% or 20% drops the rate further. Some lenders offer 100% mortgages with strict eligibility, typically requiring a guarantor or a track record of paying rent.
Is a 5% deposit enough to buy a house?
Yes — most UK high-street lenders will lend at 95% LTV to first-time buyers with a clean credit history and stable income. The mortgage rate is higher than at lower LTV tiers, and the monthly repayment is therefore larger, but the route is open.
Should I save more deposit or buy now?
The answer depends on your local market direction. In a rising market, waiting may cost you more in asking-price growth than you save in mortgage interest. In a flat or falling market, a bigger deposit is pure benefit. Check recent Land Registry sold prices in your target area before deciding.
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